One of Maine’s most energy-intensive industries is being shut out of the state’s energy efficiency programs.

Efficiency Maine has decided that it is too risky to give its grants to cannabis businesses, even if they are state licensed, because they operate outside of federal law. That makes any cannabis business a potential federal target that could be forced to close before it can achieve the energy savings needed to justify Efficiency Maine’s investment, the trust’s board concluded.

“Don’t forget, marijuana may be legal here, but it’s still federally illegal,” Executive Director Michael Stoddard said. “I can’t tell my board that (U.S. Attorney General) Jeff Sessions isn’t going to shut them all down tomorrow. He’s got that right. He’s made it clear he’d like to. We can’t invest in a business that may not be around tomorrow.”

If not for the federal uncertainty, cannabis growers would be most likely to apply for commercial and industrial program grants, which are complex, tailor-made projects with their own engineering analysis meant to keep consumption and operating costs down for Maine’s largest energy users. The grants cover up to 50 percent of an energy project’s total cost, capped at $1 million.

The grants are primarily funded by ratepayers, who pay a little extra on their electricity bills with the understanding that the grants will reduce energy consumption, making it less likely that utilities will have to make costly upgrades to the power grid that would drive up everybody’s energy bill.

In fiscal year 2017, Efficiency Maine funded about $3 million in custom program electricity grants to 30 recipients to pay for $7.3 million of completed upgrades, according to its annual report. The program pegs the amount of a grant to the projected kilowatt hours saved. The projects approved last year are expected to save about $15.8 million in avoided electricity costs.

‘DOING WHAT WE CAN ON OUR OWN’

Some of Maine’s biggest cannabis growers would like to use grants like this to buy and install LED lights to create the chemical energy that plants need to grow, energy-efficient heating and cooling units to keep a grow room at just the right temperature, and dehumidifiers to suck the moisture out of the air to prevent mold that can tank an entire crop.

As huge energy consumers, cannabis growers pay into the funds that bankroll these grants. But after one of Maine’s biggest marijuana growers inquired about a grant, Efficiency Maine’s board voted to shut all cannabis businesses out of its grant program, saying the risk of a federal shutdown of state-licensed cannabis business was too high to consider giving them a grant.

“We’re disappointed, but not surprised,” said Patricia Rosi, CEO of Wellness Connection, the company seeking the grant. “We get that a lot – too risky – but we’re state legal. Name me someone else who is state legal that can’t apply for that grant … We are doing what we can on our own, but that grant could have helped us do more.”

The board’s vote also blocked Efficiency Maine from providing technical support to Wellness, which Rosi had hoped to work with to identify and design energy savings projects that would help the grower minimize its environmental impact and cut energy costs. That was especially disappointing, as it posed little long-term financial risk to the agency and could have netted real energy savings, she said.

Wellness is implementing as many energy efficiency programs as it can afford without the grant, cutting its overall energy budget down from 20 percent a few years ago to “single digits” now, Rosi said. It recently expanded its Auburn grow operation to 40,000 square feet – the new side of the grow uses about 50 percent less energy than the old side, while still producing as much flower weight.

Rosi hopes Efficiency Maine will change its mind in time and collaborate with marijuana cultivators to help green their growing industry.

“I am not giving up,” Rosi said. “I want to believe it’s going to change, that we can work together. In Maine, we are ramping up for adult use, a broadening of the market and even more grow operations. I think it would really behoove all of us to be proactive, acknowledge there will be an impact and collaborate to minimize that impact.”

SHEDDING LIGHT ON OPERATIONS

Efficiency Maine doesn’t know how much energy Maine’s cannabis industry consumes. Until last year, when the home grow section of Maine’s adult-use legalization bill went into effect, the only legal cannabis grows in Maine were medical. Efficiency Maine did not track energy consumption of those grows, he said – it had no way to know where Maine’s 3,000 caregivers grew their crops.

Nationally, cannabis growers consumed about 1 percent of the overall electrical output in 2016, which is enough to power 1.7 million houses, according to New Frontier, a national cannabis research firm. Most of that is used to supply high-intensity discharge lights used in indoor grows, which use a lot of energy and generate a lot of heat that must then be offset by cooling systems.

Many growers in other states are using energy efficiency grants to switch over to LED lights, which can be 50 percent more efficient for the same number of lumens produced. Stoddard rightly points out that there is a lot of debate even among the cannabis industry about whether switching over to LEDs is the right move, even if the initial investment is defrayed by a grant.

Canuvo, one of Maine’s eight licensed medical marijuana dispensaries, met with Efficiency Maine before the board’s cannabis decision to explore grant possibilities when it moved its grow to a new Bridgton location. According to Canuvo, the engineers said that Efficiency Maine probably wouldn’t fund a grant for the grow, so the company decided to drop the subject and move on.

Josh Quint, Canuvo’s director of operations, said he didn’t like the idea of grows getting shut out, but said he wasn’t disappointed.

“I’m not convinced LEDs are right for us now,” Quint said. “It’s probably what we’ll all be using one day, but I don’t think we’re there yet.”

While typical LEDs might use half the energy of Canuvo’s high-intensity discharge lights, each LED fixture can only cover half as much canopy as Quint’s favorite HID lights – 9 to 16 square feet of growing area for a typical LED compared with 25 to 36 square feet of canopy for Canuvo’s HID. That means Canuvo would need twice as many LED fixtures to light the same size grow.

The need for installing additional LED lights would offset much of the energy savings achieved by a LED-to-HID switchover, Quint said.

He could achieve energy savings by spreading the LEDs out more, but he would get a lower grow yield as well, which would cut profits.

The price tag is the kicker for Quint – LEDs run about $1,000 per fixture compared with the $400 for HIDs. In Maine, where growers worry about keeping their plants warm enough for most of the year, the heat generated by HIDs can actually help cut heating bills, he said. In warmer parts of the country, LEDs might help cut air conditioning bills because they emit very little heat.

Stoddard says the LED-to-HID math explains why an efficiency grant to a Maine grower would be such a long-term investment.

Efficiency Maine evaluates a project by comparing its total financial benefit to its total cost. The cost of buying and installing the array of LED lights or a custom refrigeration unit can’t exceed the energy cost savings achieved over the life span of the equipment. The project must eventually save enough energy to break even, Stoddard said.

After meeting with some of Maine’s larger commercial growers, Efficiency Maine concluded that greening Maine’s big producers would be quite expensive. It might take some growers eight or nine years to save enough energy to justify the grants. The board concluded that it couldn’t tolerate a lengthy break-even point in an industry at risk of federal shutdown, Stoddard said.

Efficiency Maine has awarded efficiency grants to businesses that have shut down before they achieved the energy savings needed to justify the grant, Stoddard said. For example, the agency has funded some paper mills. Those grant failures have not soured Efficiency Maine on the paper industry, however. It would fund another one if the proposal looked good on paper, he said.

“Paper is not an illegal product,” Stoddard said. “The federal government doesn’t want to shut down a Maine paper mill.”

SUPPORT VARIES AMONG STATES

Ratepayer-funded efficiency programs in other states with legal medical or adult-use cannabis have taken a different approach. Many recruit growers, hoping to use grant dollars to reduce the industry’s energy consumption and reduce the burden on their electrical grid and the likelihood of brownouts, blackouts or expensive infrastructure repair or replacement projects.

Federally funded power generators like the Bonneville Power Administration, which serves three Pacific Northwest states that legalized marijuana, won’t fund incentive grants to cannabis growers, but some of the utilities it serves in these states are so convinced of energy savings in the cannabis industry that they have chosen to fund such incentive grants out of their own budgets.

That doesn’t mean that Efficiency Maine doesn’t want, or expect, the local cannabis industry to go green. In fact, Stoddard lobbied the Legislature to build energy-efficiency standards into its state licensing process. That would rule out the possibility of any grants or rebates, though, as energy-efficiency programs only reimburse companies for going above and beyond state law, not to comply with it.

The Massachusetts Cannabis Control Commission wants adult-use growers there to cap electricity use at 36 watts per square foot of grow space, which would be difficult to achieve without LEDs. There would be no efficiency grants to defray costs because it is a state mandate. Many growers say that would box all but the wealthiest growers out of that market, which opens in July.

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